Labour's financial dependence on the trade unions has been exaggerated

Just 25 per cent of the party's funding so far this year has come from affiliated unions, with party members donating most.

The GMB's decision to cut its affiliation fees to Labour from £1.2m to £150,000, in advance of Ed Miliband's plan to introduce an opt-in system for trade union members, has refocused attention on the party's relationship with the unions.

Judging by David Cameron's rhetoric, it would be easy to believe that Labour is entirely dependent on them for funding. But while it's true that the latest Electoral Commission figures show that affiliated unions were responsible for 77 per cent (£2.4m) of all donations to the party in Quarter Two, the true picture is more complex. 

The Electoral Commission doesn't publish donations below £7,500, so the funding Labour receives from its 187,537 members isn't included. In reality, as the table below shows, just 25 per cent of Labour funding so far this year has come from affiliated unions, with 29 per cent from members' subs, 22 per cent from grants and 25 per cent from fundraising and commercial sources. 

Labour will certainly suffer a major funding hit from Miliband's union reforms. The party expects around 10 per cent of the existing 2.7 million levy-payers to opt-in, which would reduce the amount it receives in affiliation fees from £8m to around £1m (although it is likely to increase the annual £3 payment). But its dependence on the unions has been much exaggerated.

Unite general secretary Len McCluskey. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

0800 7318496